A cashless society unlikely to take hold before Tubman $20 rolls out

After more than a century-long wait, women and African-Americans are finally going to be represented on the country’s paper currency. But with the new bills years away, how many people will even be carrying cash by the time they go into circulation?

That question looms over the Treasury Secretary Jack Lew’s announcement last week of a sweeping makeover of paper money to add images honoring Harriet Tubman, suffrage leaders and other historical figures. New $10, $20 and $5 notes will be issued, in that order, starting in the 2020s.

Although the long-discussed cashless society is unlikely to have arrived by then, the trend is clear: Americans are relying less on paper money and more on plastic for all manner of transactions.

For many younger Americans, that lifestyle is virtually here, with debit and credit cards covering their smallest purchases. The intended answer to the tagline of a long-running television commercial — “What’s in your wallet?” — was not dollars but a (Capital One) credit card. And Bankrate.com, a personal finance website, found in 2014, in its most recent survey, that nearly 1 in 10 Americans carried no money in their wallets.

Never miss a local story.

Sign up today for a free 30 day free trial of unlimited digital access.

Among them is Matt Bretzius, 31, president of FischTank Marketing and PR in New York. Using cards, he said, makes it easier to manage his spending and record-keeping, and his employees, most in their 20s, use digital payment services like Venmo or PayPal even to reimburse each other for a coffee.

“I very rarely see cash exchanged,” he said, “even for just 3 bucks.” When he was forced this month to use cash for several days after his credit card number was stolen, it “was sort of a weird, dirty feeling,” he said.

Bretzius acknowledged that “the historical significance of putting Harriet Tubman on the bill obviously is fantastic.” But he continued: “In 20 or 30 years when the bills are circulating, are we going to see a lot of people that have a bunch of $20 bills in their pockets or purses? I don’t think so, personally. I think we’re going to keep trending toward this digital way of spending, especially as the older generations still carrying cash are dying out.”

To argue that there will still be a receptive public for the new notes, Treasury officials on Friday pointed to Federal Reserve data that show a steady increase in the amount of currency in circulation. The $20 bills will feature Tubman, the former slave, abolitionist and suffragist, instead of the slave-owning President Andrew Jackson; $10 bills will feature five suffragists on the back; and $5 bills will honor on the back Eleanor Roosevelt, the Rev. Martin Luther King Jr. and African-American classical singer Marian Anderson.

From 1995 to 2015, the number of paper notes in circulation more than doubled, to more than 38 billion from just over 17 billion. Much of that is used in transactions outside this country, since the dollar is the international exchange currency.

“We may be a cashless society one day, but not as soon as some imagine,” Mark Patterson, a former Treasury chief of staff, wrote in an email.

He added: “A lot of people dislike paying with a device, even if it’s more convenient. Many Americans remain unbanked, making electronic payments impossible. And as long as there are babysitters, bellhops, doormen, street vendors and Christmas stockings, there will be cash.”

”But what do I know?” added Patterson, 54. “I still use cash at Starbucks.”

Greg McBride, chief financial analyst at Bankrate, echoed that skepticism about the speed of a transition to a cashless economy.

“Greenbacks aren’t going to disappear, simply because there are a lot of places on this planet that from the moment you step outside the airport, people love U.S. dollars,” McBride said.

He offered other reasons for the staying power of American cash. The biggest: “The underground economy still runs on cash,” for legal and illegal purposes.

Also, as the government continues to cut back on the number of larger bills, smaller bills like the $20 note will increase. Cash will remain in demand for tips. And should interest rates ever be negative, as they have been in Europe and Japan, more people would stash cash in safe deposit boxes.

“Never say never,” McBride said about a cashless future, “but in the next five, 10 years? Nah, I don’t think so.”

Still, he added, “We'll continue to migrate that way.” And, he said, by 2030 — when Lew hopes that all of the new bills will have gotten into Americans’ wallets — a cashless society will be “certainly getting closer.”